Current mortgage rates in January are falling.
Freddie Mac, in its weekly survey of more than 100 lenders nationwide, reported the average thirty-year rate fell another 3 basis points (0.03%) to 4.09% this week.
Rates are down from a near-three-year high of 4.32% set the last week of December.
This is a welcome change of protocol for today's mortgage rate shopper.
Since the hours following the historic 2016 election, rates have been on a nearly unmatched run skyward.
From trough to peak, mortgage rates rose 91 basis points, or nearly one full percentage point between July and December.
But opportunity still exists for rate shoppers.
Mortgage rates tend to run up quickly then fall in response to an overreaction in the marketplace. The Mortgage Reports predicted falling rates in January due to this phenomenon, and it appears the forecast was correct.
As a home buyer or refinance-eligible homeowner, January could be your second chance at a very low rate.Click to see today's rates (Jan 24th, 2017)
Each week, mortgage agency Freddie Mac surveys 125 lenders nationwide for its Primary Mortgage Market Survey (PMMS), a snapshot of current mortgage interest rates.
It asks mortgage companies, banks, and credit unions, and other lenders their current rate for a well-qualified borrower putting 20% down, and paying "discount points," or extra fees that directly reduce the rate.
Arguably, Freddie Mac's mortgage rate survey is not a very good indicator of up-to-the-minute rates.
In fact, mortgage rates climbed at the tail end of Freddie Mac's Monday-through-Wednesday polling.
Markets were closed Monday for Martin Luther King, Jr. Day. Tuesday and Wednesday saw better rates than what is currently available.
Still, rates are down considerably from the start of 2017.
Mortgage rates change by the minute. The only way to get an accurate rate, then, is to request one from a mortgage lender that can provide current, available rates for your situation.Click to see today's rates (Jan 24th, 2017)
Just weeks ago, there were few reasons to choose a mortgage other than a 30-year fixed rate.
Even homeowners planning to sell their home or pay off the loan often chose a 30-year for the extra security it provides.
Plans change, markets dip -- the 30-year loan offered "insurance" against these events, while keeping payments ultra low.
Now homeowners are reconsidering that logic.
The 15-year fixed loan -- though it comes with a higher payment -- offers rates comparable to those once available for 30-year loans.
For rate-conscience borrowers, this loan product could be a second chance at a super-low rate.
15-year loans are not without disadvantages, though. Payments are often unaffordable for first-time home buyers or those on a tight budget.
At today's rates, a 15-year payment will be about 45% higher than a 30-year one.
The solution, then, could be an adjustable-rate mortgage. An ARM loan offers a fixed rate for a certain number of years, then adjusts based on the current market.
For instance, a 5-year ARM provides a low rate for five years before any risk of moving upward. Currently, the 5-year ARM averages 3.21% -- thirteen basis points (0.13%) lower than this week's 15-year fixed average rate of 3.34%.
Most homeowners remain in their mortgage for less than seven years. An ARM could be perfect for the home buyer or homeowner that plans to move up in the medium term.
Homeowners who are less risk-averse could select a 7-year ARM or even a 10-year adjustable loan. These products provide a stable product at lower rates than available for a 30-year fixed mortgage.
In today's rising rate environment, a mistake could be assuming the 30-year fixed rate is your only option.Click to see today's rates (Jan 24th, 2017)
Freddie Mac polls more than 100 lenders to arrive at a national average rate.
But the agency requests conventional/conforming loan rates only. It leaves out mortgage rates for government-sponsored programs that could come with even lower costs.
In today's rising rate environment, a non-conforming loan could be the right decision for some homeowners.
Three loan programs in particular -- the USDA home loan, VA mortgage, and FHA loan -- are government-backed mortgages with rates still in the 3s.
The USDA loan is available in less dense neighborhoods across the U.S. It offers zero down payment and lenient credit score minimums.
Eligibility is based, in part, on location of the home. Ninety-seven percent of U.S. land mass is eligible for a USDA loan, so homebuyers looking for housing outside of major metropolitan areas should check this option.
The zero-down VA home loan program comes with lower-than-conventional rates, according to loan software provider Ellie Mae, undercutting conventional loan rates by an impressive 25 basis points (0.25%).
Veterans with as little as 90 days of service history could be eligible for a VA loan.
With rates falling, the FHA loan rates are dipping into the high-3s. About forty percent of home buyers under the age of 37 buy their first home with FHA.
It's no surprise.
FHA requires just 3.5% down and is very lenient about credit scores. According to a report released by Ellie Mae this month, 56% of FHA borrowers had a credit score between 600 and 699.
Only 16% of conventional loan applicants had similar scores.
The FHA home loan is the go-to program for home buyers without perfect credit profiles, little cash to put down, and the desire to become a homeowner as soon as possible.
Many lenders are offering these loan types at rates in the 3s, even as conventional rates are solidly above 4%.
Today's interest rates are still low, despite the post-election jump. Historically any rate in the 4% range was considered "too good to be true." But those rates are still available.
Get today's live mortgage rates now. Your social security number is not required to get started, and all quotes come with access to your live mortgage credit scores.Click to see today's rates (Jan 24th, 2017)
The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.
Barry L. Systems Analyst
The Mortgage Reports is an excellent resource. I depend on the Mortgage Reports for the most up-to-date information regarding shifts in government policy and mortgage rate information in general.
Thomas D. Software Developer
As a first time home buyer, The Mortgage Reports has been the only voice that I can trust, and the expertise has been helpful.
The Mortgage Reports is invaluable. It's our primary source for information on housing finance.
2017 Conforming, FHA, & VA Loan Limits
Mortgage loan limits for every U.S. county, as published by Fannie Mae & Freddie Mac, the Federal Housing Administration (FHA), and the Department of Veterans Affairs (VA)